Don't listen to this

Don't listen to Another Frightening Show About The Economy as it's entirely too scary.

I had to stop and blog about it in Act II when, after doing an excellent job explaining what a credit default swap is, they say at about 27 minutes in:

"The corporate bond cash market is approximately 5 trillion dollars, and the (something) amount of CDS outstanding is approximately 60 trillion dollars. In other words, there are 5 trillion dollars worth of bonds issued in the world, but the total amount that people have bet on those bonds is 60 trillion. For every bond there are 10 people promising to pay the full amount if the bond goes bad.

Oh, and there's one more thing. All of this is unregulated..."

Wow. Of course there's no problem until bonds start failing. Oh and then they go on to talking about how the swap contracts are nearly entirely based on leverage.

Well I listened to Acts I and II today, and will come back and finish with III and IV tomorrow (I'll start at 40:15). Really interesting, really scary and of course maddening, check it out.

Don't listen to this

Monday, Oct 6 at 4:46 PM

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